Help U.S. Companies Compete Globally with New Tax Code

Published December 1, 2003

October 10, 2003

The Honorable William Thomas
Committee on Ways and Means
United States House of Representatives
1102 Longworth House Office Building
Washington, DC 20515

Dear Chairman Thomas:

By taxing income earned in other nations and imposing high tax rates, the current United States tax system violates important principles of good tax policy. These anti-growth features undermine the economy’s performance and hinder the ability of American firms to compete in the global economy. More specifically, the tax code unduly raises the cost of capital for U.S. firms trying to invest, taxes profits at a rate far higher than do our trading partners, and is littered with complex rules that often result in double taxation of foreign income while many countries do not tax active foreign income at all.

We are writing to commend you for seeking to reform the tax treatment of international business income. Your proposed legislation, H.R. 2896, the “American Jobs Creation Act of 2003,” takes important, fundamental steps towards a territorial, consumption-based tax system. This will improve the competitiveness of the U.S. tax code and help create a level playing field for U.S.-based companies. These changes will allow U.S. firms to expand both domestically and internationally and will increase U.S. employment.

In addition, we would like to recognize important provisions in your bill that lower the cost of capital, encourage investment, and make another step forward towards a neutral, progrowth tax code. Specifically, reducing the depreciation lives for equipment is a commendable step forward in the quest for a consumption-based tax system that allows investment to be immediately expensed.

Although we are disappointed that the World Trade Organization (WTO) and the European Union are attempting to dictate U.S. tax law, we believe that enacting H.R. 2896 will result in a tax code that better promotes U.S. business both within the U.S. and abroad. Such changes will result in greater productivity, output, and employment.


Glenn Hubbard
Columbia University

Kevin Hassett
American Enterprise Institute

Daniel Mitchell
The Heritage Foundation

Veronique de Rugy
Cato Institute

Richard Rahn
Discovery Institute

Charles Calomiris
Columbia University

Richard Vedder
Ohio University

Deepak Lal
University of California, Los Angeles

Anna J. Schwartz
National Bureau of Economic Research

Ryan C. Amacher
University of Texas at Arlington

Charles W. Baird
California State University

Don Booth
Chapman University

Thomas E. Borcherding
Claremont Graduate University

Charles H. Breeden
Marquette University

Wayne Brough
Citizens for a Sound Economy

Boyd Collier
Tarleton State University

Nicholas Eberstadt
American Enterprise Institute

Kenneth G. Elzinga
University of Virginia

Eric Engen
American Enterprise Institute

Stephen J. Entin
Institute for Research on the Economics of Taxation

Edward W. Erickson
North Carolina State University

Frank Falero
University of California, Bakersfield

Peter Ferrara
International Center for Law and Economics

Fred Foldvary
Santa Clara University

Micah Frankel
California State University

David E.R. Gay
University of Arkansas

Paul Y. Hammond
University of Pittsburgh

Robert Haywood
World Economic Processing Zone Association

Randall Holcombe
Florida State University

Matt Kibbe
Citizens for a Sound Economy

Robert Krol
California State University, Northridge

Edward J. López
University of North Texas

Yuri N. Maltsev
Carthage College

Michael L. Marlow
Cal Poly, San Luis Obispo

Roger E. Meiners
University of Texas-Arlington

Harry Messenheimer
Rio Grande Foundation

Mark J. Perry
University of Michigan-Flint

William H. Peterson
The Heritage Foundation

Barry Poulson
University of Colorado at Boulder

Jan Prybyla
The Pennsylvania State University (Emeritus)

Don Racheter
Public Interest Institute

George Reisman
Pepperdine University

Tim Roth
University of Texas at El Paso

James Roumasset
University of Hawaii

Paul H. Rubin
Emory University

S. Fred Singer
University of Virginia (Emeritus)

Richard H. Timberlake, Jr.
University of Georgia, retired

John T. Warner
Clemson University

Gary Wolfram
Hillsdale College